Tuesday, December 9, 2008

Car Czar: Crazy

Apparently, we're going to give the car industry $15B and they will have to the end of March to restructure the entire industry or there will be no more money. Here's how Pelosi explains it:
"Unless the restructuring that is called for in this legislation and the goal of viability is achieved by March 31, there is no justification for spending more taxpayer dollars."
Against my better judgment, I will go ahead and assume that "viability" means the car companies will be able to function on their own by the end of March. They are going to "achieve" the goal of "viability" is by putting a presidential political appointee "in charge" of sorting out the whole mess and making the tough decisions if Detroit is not willing to make them itself.

Huh? WHAT?!?

Isn't this what Chapter 11 bankruptcy court is for? There is no way a political appointee is going to be able to make the tough decisions required to break union contracts, change dealership deals, restrain creditors, etc. "Oh, yeah, sorry Barack. I know you really don't want to be known as the president that told Detroit to drop dead. But, you know, I wanted to do the right thing. Got any more appointments for me?" Please. I don't understand why we can't do this in court. It has worked for the airlines. I'm actually okay with the government fronting the money because it's unavailable in the credit markets right now. But I see a real danger entrusting this mess to anyone other than a bankruptcy judge.


friedmanite said...

Al, don't you know that central planning of the economy always works? Just check how chock full of goods the grocery stores were in communist USSR.

GammaBoy said...
This comment has been removed by the author.
GammaBoy said...

Or how wonderful their cars were. Nothing makes the heart race like Russian automotive engineering.

Restless Native said...

In spite of my being a Dem, I think the car czar is a bad idea, and agree that this is not the answer. Some Republicans in the Senate are arguing that the Czar wouldn't have ENOUGH power. What the hell?

I would give Ford the line of credit it is seeking, roll Chrysler into GM and also give them the money they need (we're talking $34B vs. the $160-some billion already given to AIG) and then hold them to certain standards. Fuel-economy goals met by x date or I call in x% of the stock, and things of that nature. If they continue to f-up and don't meet a series of goals established by a board of scholars - Wharton (business), Carnegie Mellon (industrial engineering), Rice (environmental and nano) etc - and businessmen from other industries/countries then the taxpayers get the company and you sell off the bits with the goals of recouping the taxpayer's money while maintaining US production and US jobs.

T. Friedman had a piece the other day on the development of electric cars paralleling the development of the infrastructure to make them viable. Interesting.